PERSONAL FINANCE ASSIGNMENTS 3
Thereare three fundamental differences that relate to buying a car andleasing it. Buying a car involves taking both the possession andownership of the vehicle by the buyer. However, in leasing, thelessee only takes possession and not ownership of the car. Inaddition, the owner pays for the full cost of the car when buying.However, in leasing, the lessee only pays for the value of the timehe or she will be using the car. Finally, buying a car transfers allthe economic risks of the car to the buyer. However, leasing does nottransfer the economic risks to the lessee as they still remain withthe owner.
Inmy case, I would only lease a car when I need it for a period of lessthan one year. However, if I need the vehicle for more than one year,I would not lease, but buy. This is because it is cheaper to leasefor a period of less than one year and expensive to lease for alonger period. This is the consideration I learned from the sites andfrom the book, about the long term costs and short term costs.
Frommy budget, the top three expenses are food, education and shelter.The only expense I can lower here is the food. I would do this bybuying food in bulk, so that I can enjoy discounts and lowerwholesale prices. My lowest three expenses are internet costs,clothing and entertainment. To lower these expenses, I would reduceentertainment, buy clothing in bulk and reduce big downloads from theinternet.
Reductionin the cost of gas leads to savings because the current budget willbe lower in fuel cost than the previous. Therefore, I would use thesavings obtained from low gas prices to buy more of the items in thepriority. For instance, I would increase the number of books I buyand rent from the library. This will make my budget remain the sameand still earn me more utility for my education and other items onthe top three expenses.